6 Common Questions About Workers' Compensation Insurance in the U.S.

In the United States, whether for small to medium-sized businesses or large corporations, Workers' Compensation Insurance is one of the basic commercial insurances for employers. Workers' compensation insurance ensures that employees receive necessary medical support and financial compensation if they are injured or become ill on the job, while also reducing the legal and financial risks for employers.

Most states in the U.S. require employers to provide workers' compensation insurance for their employees. This is not only a legal requirement but also a key measure for protecting employee rights and promoting long-term business growth. By offering comprehensive protection for employees, workers' compensation insurance helps ensure a more stable and healthy working environment for employees and businesses.

Which Businesses Need to Purchase Workers' Compensation Insurance?

Workers' compensation insurance is regulated by state governments, and each state has different requirements and penalties. Most states require employers to purchase workers' compensation insurance before hiring employees, ensuring that employees receive the necessary protection.

Can a Business Choose Not to Purchase Workers' Compensation Insurance?

In most states, if a business is required to purchase workers' compensation insurance and fails to do so, the business owner may face fines or even imprisonment.

What Types of Employees Are Eligible for Workers' Compensation Insurance?

According to New York State law, most individuals providing services to a for-profit business are considered employees. An employee is defined as a person working under the supervision, direction, and control of the employer, regardless of whether they work on the business premises. Employers should provide workers' compensation insurance for full-time, part-time, temporary, seasonal, day laborers, leased workers, and others.

What Does Workers' Compensation Cover?

If an employee is injured at work or develops an illness due to work-related causes, workers' compensation benefits can help cover the following expenses:

• Medical Expenses: This includes costs related to treatment, hospitalization, and medications.

• Lost Wage Compensation: Provides partial or full wage replacement when an employee is unable to work due to injury or illness.

• Rehabilitation Costs: Covers vocational rehabilitation and physical therapy to help the employee regain work capability.

• Disability Compensation: Offers compensation for temporary or permanent disabilities caused by work-related injuries.

• Death Benefits: In cases where a work injury or illness leads to death, workers' compensation provides financial support to the employee's family.

How Much Compensation Can Employees Receive?

Taking New York as an example, according to the New York State Workers' Compensation Board (NYSWCB), the compensation amount is calculated by multiplying 2/3 of the employee’s average weekly wage by the disability percentage. For example, if an employee's average weekly wage is $900 and the disability percentage is 100%, the employee would expect to receive around $600 per week in compensation. In New York, the minimum weekly compensation is $275, and the maximum is $1,145.43 per week.

When Are Employees Not Covered by Workers' Compensation?

Workers' compensation covers most injuries occurring during work, there are certain situations where coverage does not apply (Reference from AmTrust):

• Injury During Commuting: If an employee is injured while commuting to or from work, this is generally not considered part of their employment and is not covered.

• Intoxication/Intentional Act: If the injury occurs due to intoxication or use of illegal substances and is the sole cause of the injury, it is typically not covered.

• Horseplay: Injuries resulting from horseplay in the workplace are generally not covered unless an employee is injured without participating directly in the incident.

• Intentional Acts: Injuries that an employee intentionally causes to themselves or others are not covered by workers' compensation.

• Illegal Activities: Injuries sustained while engaging in illegal activities at the workplace are not covered.

• Policy Violations: Workers' compensation does not cover employees who are injured while violating company policies.

• Terminated Employees: Once an employee is terminated or laid off, they are no longer covered unless the injury occurred before their termination.